Kentucky Independent Contractors: What you need to know

Whether a worker is an “employee” or an “independent contractor” is critical when it comes to such important issues as pension eligibility, workers' compensation coverage, wage and hour law, and many other matters. In some situations, federal law will govern, but the question is most often resolved by looking to state law, particularly in areas such as unemployment tax liability, workers' compensation, and state wage and hour requirements.

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Kentucky's workers' compensation law covers every person in the service of an employer under any contract of hire or apprenticeship, express or implied (KY Rev. Stat. Sec. 342.640). Thus, an employer-employee relationship is a prerequisite for determining whether an individual is eligible for workers' compensation coverage. According to the Kentucky Supreme Court, the four predominant factors that distinguish an employee from an independent contractor are (1) the nature of the work as related to the business generally carried on by the alleged employer; (2) the extent of control exercised by the alleged employer; (3) the professional skill of the alleged employee; and (4) the true intent of the parties (Uninsured Employers' Fund v. Garland, 805 S.W.2d 116 (1991)).

Employees covered by the unemployment compensation requirements include individuals who are employees under the usual common law rules for determining the employer-employee relationship (KY Rev. Stat. Sec. 341.050).

An individual must be an employee to be protected by Kentucky's minimum wage, overtime, hours of work, and other wage and hour provisions. A covered employee is defined as any person employed by ...